Key points:
- Caerus Minerals was up 89% at one point this morning
- This is now falling back to “only” 68% up
- But what was the trigger for the initial jump?
Caerus Mineral Resources (LON: CMRS) shares are up 90% (OK, CMRS is 88.9% at pixel time) this morning in London on no apparently discernible news. To try and decide what to do next it's necessary to try and work out why this move. Sure, we can all do momentum trades but they still require working out what is driving the price. For only once we know why the price is moving can we try to think of how far it might go or even when it might stop doing so.
The problem, as we say, is that there's no particular news to drive the Caerus price. We can't even bring into play that possible confusion between Caerus Minerals and Caerus Ventures – there's no news for Ventures either. Given that Caerus wants to go copper mining perhaps that's it – but the copper price hasn't moved that much and anyway we're enough years away that it wouldn't have that effect anyway.
We've no announcement of significant stakes being built. There's not been the announcement of a deal. And most importantly there's been no announcement of any solutions to the varied problems at Caerus Minerals. The most obvious of which is that it looks like thy're entirely out of luck in gaining a mining licence. But that's not the only problem either.
Also Read: The Best Copper And Mining Stocks to Watch in 2022
We've no information update after last week's depressing news. The Cypriot MoD is refusing to allow mining at one licence area – the licence is effectively cancelled. Worse is to some, the JV partner hasn't been paying up its share of the costs. Then there's a dispute over $2 million with an earlier owner of one of those projects.
This is the sort of thing that junior miners can be prey to. The original idea, to look for copper in Cyprus, has a lot to recommend it. Working over old mines with more modern technology has long been a very successful tactic. Extraction and processing technologies do progress over time after all. Cyprus has been mined for copper for at least 3,000 years. So, no problem with that basic plan.
But then those problems seem to start. A junior miner not only needs to have some advantage – an extraction tech, a rich deposit, something. It also needs to have the legal right to extract. Then it needs the finance to be able to prove the concept. Only at that point of proof – proof of legal right, proof of process and deposit – is it possible to gain finance on banking terms rather than high risk capital market terms.
The problem for Caerus Minerals is that it hasn't proven too many of those things. So, whether there's even a useful project here, let alone an exploitable deposit, is as yet unknown. Given this it's difficult to think of why the CMRT share price should jump 89% in a morning. And, indeed, it seems to be falling back now, “only” 68% up. Position taking might well require more information about what is happening here.
There is some talk that it's this announcement which is parking the price movements. Bezant might agree to actually pay its share of the JV expenses. It's possible to read that either way – it will and it's significantly positive news. Or that it can – it has the cash – and isn't yet is the prelude to a renegotiation.